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THE WHITE HOUSE
WASHINGTON
March 4, 1986
MEMORANDUM FOR MATTHEW V. SCOCOZZA ASSISTANT SECRETARY FOR POLICY AND INTERNATIONAL AFFAIRS DEPARTMENT OF TRANSPORTATION
FROM: JOHN G. ROBERTS ~#,/ / , , ASSOCIATE COUNSB'L TO Ttrn PRESIDENT
SUBJECT: Department of Transportation International Aviation Decision: Nippon Cargo Airlines Company, Ltd.
The attached correspondence is referred to you pursuant to Section 4 of Executive Order 11920. That provision directs individuals within the Executive Office of the President to "follow a policy of ••• referring any written communication from an interested private party [under section 801}, or an attorney or agent for any such party, to the appropriate department or agency outside the Executive Office of the President."
Mr. Hart telephoned me about the application of Nippon Cargo Airlines, with which I was unfamiliar. I advised Mr. Hart that if the matter were a Section 801 case, the Executive Order would prohibit me from discussing it with him. Shortly thereafter, I received this correspondence. I have advised Mr. Hart that, pursuant to Section 4 of the Executive Order, future contact should be nonexistent, not "minimal." WILLIAMS & JENSEN PAUL ARNESON A PROFESSIONAL CORPORATION GEORGE D. BAKER LAWYERS WILLIAM T. BRACt'. ANN S COSTELLO 1101 CONNECTICUT AVENUE. N.W 'WINFIELD P. CRIGLER . ·'TELEPHONE: .JUNE E EDMONDSON WASHINGTON, D.C. 20036 "ROBERT E. GLENNON (202) 659·820' J. STEVEN HART ROBERT E . .JENSEN February 25, 1986 JOHN J. MCMACKIN, .JR. GEORGE G. OLSEN MARY LYNNE WHALEN J. D. WILLIAM$
John G. Roberts, Jr., Esquire Associate Counsel to the President 112 Old Executive Office Building Washington, D. c. 20500 Dear John:
You were correct. The Nippon Cargo Airlines (NCA) application falls under section 801. Apparently, the NCA issue had not made it to your desk.
I enclose a copy of the Department of Transporta tion decision and a recent news article reflecting Japan's strong interest in a prompt resolution of this issue. A Japanese delegation will arrive here on March 3 and hopes to be greated with good news.
I thought you might be interested. Due to the 801 restrictions and the fact that our client, NCA, is a foreign corporation, I will keep future contact minimal.
JSH/ajb Enclosures The Journal of Cormnerce, Friday, February 7, 1986
• Naliasone Seelis Reagan's Aid Ill Tallis By A.E. CULLISON Japanese who, since 1970, have in· made too manv concessions to the sisted that JAL be the sole designat- ' United States during recent negotia· TOKYO - President Ronald ed carrier for Japan. ' , tions. Particularly disturbing to Reagan has been sent a pel"'SOnal let· The Japanese have been com many Japanese has been the Naka ter bv Prime Minister Ya.suhiro Na plaining as well that JAL's beyond sone government's permission for kasone seeking his assistance in ob routes are too limited at a time United Airlines to take "4>Ver ~u the taining key concessions for Japan when the U.S. airlines themselves rights now owned by Pan American during the civil aviation talks scbed· enjoy freedom in principle on routes World Airways' trans-Pacific divl· uled to open on March 3. involving Japan. sion. These rights were purchased by Government officials in Tokvo Japan's negotiators have been United, including stopovers beyond disclosed Thursday that Mr. Naka· pressing the United States to agree Japan. sone appealed to President Reagan to permit JAL to fly to South Ameri· for an increase in the number of can destinations after stopping in United also has been granted the flights permitted to Nippon Cargo New York and Los Angeles. right to fly 53 flights weekly on Airlines on routes to the United trans-Pacific routes, more than the States and to allow Japan Air Lines It is expected that negotiators 33 nights currently provided by Pan to launch freight service to Chicago. from the two nations will launch American, from February 11, and 56 According to tbe Japanese offi working-level discussions in Tokyo flights from April 28. cials. the Prime Minister also asked on Monday to deal with U.S. requests President Reagan to use his influ that Japan simplify customs proce From the Japanese point of view. ence to see that the U.S. negotiators dures at Japanese airports and that these concessions will place Japan's agree to end the alleged disparity in control..; on night landings at Narita airlines at a competitive disadvan the number of designated companies and Osaka airports be eased. tage. But it is understood that Secre tary of State George P. Shultz has permitted to schedule their own However, it is likely that the Jap number of flights. promised that the United States will anese Prime Minister is counting on In addition, Mr. Nakasone's letter make positive efforts to eliminate President Reagan's help in seeing requested the president to support the current imbalance in the number that the Japanese arguments are al Japan's efforts to obtain a revision of nights between the two countries. so placed on the table in preparation of tbe beyond rights issue between for further consideration when the . the two countries. Prime•Minister Nakasone's letter talks get down to other matters in to Mr. Reagan is considered in Under the present bilateral civil March. aviation pact, JAL, the Japanese Tokyo as a move to settle the il'>sues flag carrier, is the only designated Japan's prime minister has been on a political level rather than to airline from Japan allowed to oper under increasing pressures from his leave the problem to the bureau ate its own number of flights. In own civil aviation authorities and crats. The official U.S. position for contrast, three U.S. airlines are des from high-level members of his rul· years has been that tbe present civil ignated carriers. But the U.S. author ing Liberal Democratic Party. who aviation agreement between Wash· ities have pointed out that it was the believe that his administration has ington and Tokyo is not unbalanced. UNITED STATES OF A~ERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D•• C. ------NIPPON CARGO AIR.i.iNESCOOAi.~., t Docket 42023 ~
NOTICE
The attached decision was submitted to the President pursuant to section 801 of the Federal Aviation Act on February 6, 1986.
Public release has been authorized in accordance with the provisions of Executive Order 11920, 41 Fed. Reg. 23665 (June 10, 1976). This is not a final decision since it has not been acted upon by the President.
By:
PHYLLIS T. KAY1..0R Chief, Documentary Services Division
(SEAL) ..... UNITED STATES OF AMER!tA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D. C.
Issued by the Department of Transportation on the 6th day of February, 1986
Application of NIPPON CARGO AIRLINES COMPANY, LTD. Docket 42023 for a foreign air carrier permit pursuant: to section 402 of the Federal Aviation Act of 1958, as amended
ORDER ISSUING FOREIGN AIR CARRIER PERMIT
On February 29, 1984, Nippon Cargo Airlines Company, Ltd. (NCA) filed with the Civil Aeronautics Board an application for an initial foreign air carrier permit'!...! to engage in scheduled all-cargo services . commencing April 1, 1985, (1) between a point or points in Japan and the coterminal points San Francisco and New York, and (2) between a point or points in Japan and the terminal point New York, New York, via the intermediate point Anchorage, Alaska. 2; NCA further requested authority to perform cargo charters in accordance with 14 CFR Part 212. In support of its application, NCA stated that it has been licensed by its government to perform the all-cargo services at issue here, and, by Diplomatic Note dated November 16, 1983, was designated by the Government of Japan in accordance with !rticle 4(A){l) of the United States-Japan Air Transport Services Agreement, as amended. '!./
ll NCA 1s application was summarized in the Federal Register, 49 FR 9244, March 12, 1984. . 2/ On April 9, 1984, NCA amended its application, defining its request Tor Anchorage intermediate authority as a technical stop. 3/ TIAS 2854, 4158, 5939, 6787, 7333 and 8882. 2
ANSWERS During March. 1984, Federa1 Express Corporation, The F1ying Tiger Line Inc., and Transamerica Airlines, Inc-. filed.answers in response to NCA 1 s permit application. The carriers urged deferral of .~CA 1 .s a.p.pli~c,a_tio.n._ pending resolution of various aviation issues with Japan. Federal Express and Flying Tiger also expressed concerns about possible antico~etiti ve consequences of NCA 's ownership.
Specifically, Federal Express argued that action on NCA 1 s application should be deferred pending the concurrent grant of al I-cargo authority to Federal Express or unti1 an indication of willingness by the Government of Japan to grant such authority to Federa1 Express.
Flying Tiger listed (1) Japanese domination of the air freight market, and the likelihood that NCA's entry would increase Japan's market stiare. and, (2) the fact that NCA 1s application cannot be considered independent of Japan Air Lines 1 request for expanded cargo rights into and beyond the U.S.
Transamerica stated that it had no objection to NCA 1s application provided the U.S. reached a satisfactory understanding with Japan regarding additional U.S. carrier designations under the bilateral agreement. Transamerica also noted that while NCA sought scheduled as well as charter authority, its Japanese license only provides for the operation of scheduled services. On May 14, 1984, NCA filed a reply to the answers of Federal Express, Flying Tiger and Transa~rica.~/ On June 28, 1984, NCA filed a motion for expeditious treatment of its pending application and was answered by Flying Tiger. On July 18, 1984, NCA responded. ~ RESULTS OF U.S.-JAPAN NEGOTIATIONS On May 1, 1985, the United States and Japan signed an interim agreement, embodied in a Memorandum of Understanding, which, among other things, provides for NCA to commence its all-cargo services and to continue them
4/ NCA 1s reply was accompanied by a motion for leave to file an otherwise unauthorized document. §_/ We will grant all rrotions to file otherwise unauthorized documents. 3 until the conclusion of comprehensive revision talks. 6/ . - On April 30, 1985, we orally granted NCA an exemption.. sua ·s-p.onte.., f.r-0m· ---~ section 402 of the Act to perform those services provided for in the -MOU_,_ until September 6, 1985, or the conclusion of the comprehensive revision talks, whichever was later. This authority was and is subject to our standard conditions applicable to exemption authority, and to NCA 1 s adherence to the terms of the MOU. That exemption authority remains in effect, and NCA is currently conducting operations under that authority. DECISION We have decided to issue NCA a foreign air carrier permit authorizing it to perform a11-cargo services between Tokyot Japan, and San Francisco/New York. We have thoroughly reviewed the record and have decided to grant the application using the simpiified Subpart Q procedures.2,/ The public was informed of the carrier's application by notices in the Federal Register and the CAB 1 s weekly list of applications filed, describing the authority sought and giving interested persons an opportunity to submit evidence and objections to the award of the authority. These notices provided the required notice and filing opportunities. Simplified procedures are appropriate in this case, because there are no material issues of fact which require other procedures .. We are granting NCA the authority it seeks to the extent that it is encompassed by the April 30, 1985, MOU and subject to t·he conditions and limitations contained in that agreement.
E_/ The MOU provides for NCA to operate six (6) wide-body roundtrip all-cargo flights per week on a route between Tokyo and San Francisco/New York as of May 1, 1985. The MOU provides that NCA may increase its frequencies from April 1, 1986, by a percentage equal to the percentage increase in the total air cargo traffic between Japan and the United States for the period January l, 1985, to December 31, 1985, over the total air cargo traffic for the period January 1, 1984, to December 31, 1984, and similarly for each succeeding year. The MOU also provides that any increased frequencies that become available and are not used may be reserved for later use. The MOU also specified additional rights that would be available to U.S. carriers. 1f 14 CFR 302.1701 et~· Under Rule 29(h), we may, in our discretion, omit a tentative decision in proceedings under Subpart Q and proceed directly to a final decision. 4
In rea-ching our decision, as more fully discussed below, we find that, based on the record, NCA is substantially owned and.effe-ctl'!e}y... ·----- controlled by nationals of Japan, and that it fs fif, willing and ab~e tq. conduct the authorized services and adhere to the provisions of the Act, and our rules, regulations, and requirements. PUBLIC INTEREST CONSIDERATIONS
The per!'T'it authority granted by this order is provided for in the May l, 1985, Memorandum of Understandino between the United States and Japan. ~/ On August 13t 1983, NCA was issued a license by the Japanese Ministry of Transport (NCA Exhibit 402, Docket 42023} to perform schedu1ed "a11 freight service" over the routing Tokyo-San Francisco-New York. In November 1983, NCA was designated by the Government of Japan under Article 4(A)(l) of the United States-Japan Air Transport Services ~greement to serve Japanese routes 1 and 3 of the Route Schedule appended to the Agreement.
We find that the view of the U.S. carrier respondents that we should defer action on NCA's request until resolution of pending U.S.-Japan aviation issues has been effectively dealt with by the signing of the May 1, 1985 interim agreement, which specifically provides for this authority to be granted to an airline of Japan.~ We have also considered arguments concerning the possible anticompetitive consequences of NCA's ownership. Although we do not believe that this factor warrants withholding permit authority, we intend to monitor the situation. We also note that the Department of Justice has been fully apprised of the situation and has filed no objections to the issuance of the permit. NCA'S OWNERSHIP AND CONTROL NCA was formed on September 21, 1978, by four Japanese shipping companies 10; and AlJ Nippon Airways, a domestic Japanese scheduled
.,
8/ The authority granted is subject to the limitations of the MOU. ihus, NCA is limited to six flights per week and any request to operate extra sections would require additional authority. 9/ The MOU also provides for additional passenger and cargo rights for U.S. carriers. The Department has instituted a case to determine which U.S. carriers should exercise those rights. See Order 85-11-29, November 13, 1985, instituting the U.S.-Japan Gateways-cise, Docket 43575. 10/ The Japanese shipping companies are Kawasaki Kisen Kaisha, Ltd. ("KN t'fne); Nippon Yusen Kaisha (NYK Line); Mitsui O.S.K. Lines; and . Yamashita-Shinnihon Steamship Co., Ltd. {Y.S. Line). Japan Line, Ltd. (Japan Line) and Showa line, ltd. subsequently became stockholders. s carrier. Subsequent stock transactions diversified NCA's ownership. As of April 1, 1984, the company had 6,400,000 snares of stock issued and outstanding, 100'1. owned by Japanese citizens.11/- .... ~----·---~ _,-- OPERATIONAL FITNESS We find that NCA is operationally fit to conduct the operations at issue here. Biographic.al data supplied by the applicant demonstrate that ai1 of NCA 1 s officers, directors and key management personnel have considerable transportation experience. NCA management personnel have been draw~ f rorn companies with extensive experience in shipping, air freight forwarding. raii and air carrier operations. NCA stated that it would inaugurate its proposed services with dry-leased A11 Nippon Airways 1 B-747-200 ai re.raft to be used exc1usi ve1y by NCA. Maintenance of NCA's aircraft will be performed in accordance with ICAO standards by All Nippon Airways at Tokyo. Transit checks on the aircraft will be performed under contract supervised by NCll. maintenance representatives. NCA stated that it had not been involved in any safety or tariff violations during the five years preceeding the filing of the permit app1ication.12/
11/ NCA's stock is issued as follows: 11 K11 Line (lOi}, NYK Line (lO"t). Mitsui O.S.K. Lines (10\), Y.S. Line (lO"t), A11 Nippon Airways (lOi), Japan Line (5%), Showa Line (5i), 23 Japanese Banks (15.47~), 16 Japanese insurance CO!ll>anies (11.09~), and 34 other Japanese citizen companies (13.44%). See Exhibit NCA-103, Docket 42023. 12/ By letter dated March 13, 1984, the CAB requested that the FAA provide a safety and compliance evaluation of NCA. By letter dated March 22, 1984, the FAA's Office of Flight Operations stated that although NCA held no operating authority, it knew of no reason why the CAB should act unfavorably on NCA's pending permit application, so long as it made any authority granted to NCA subject to the customary conditions. A copy of the CAB's letter and the FAA's response have been placed in Docket 42023. On July 18, 1985, the FAA advised the Department that on May 1, 1985, NCA had been issued FAR Part 129 Operations Specifications and it knew of no reason why we should act unfavorably on NCA's application. 6 FINANCIAL FITNESS We find that NCA is fit to conduct the operations we are authorizing without exposing the public to undue financial- risk. The a.pplicant stated that because its proposed operations were not-.t.o _co"'*D.Ce-'unt f1,._. ___ -----: ,,~-- 1985 it was unable to provide historical financial statements based on operations. NCA did, however, provide forecast baiance sheets for April 1. 1984 and 1985t which are summarized in Appendix A to this order. In addition. NCA provided current balance sheets and profit and 1oss statements for the seven origina1 NCA stockholders.13/ NCA further stated that it does not receive, or expect to receive, ffnancia1 assistance fro~ the Government of Japan. The applicant stated that it had been ab1e to meet its financial obligations, had never defaulted on transportation commitments, and hact never been refused debt f inanci ng •..!..i/ ln view of the foregoing and all of the facts of record, we find and conclude that: 1. Nippon Cargo Airlines Company, Ltd. is qualified and has been designated by its government to perform the air services described in the attached permit; 2. Nippon Cargo Airlines Company, Ltd. is fitt willing and able properly to perform the foreign air transportation described in the attached permit and to conform to the provisions of the Act, and to our rules, regulations, and requirements; 3. The public interest requires that the exercise of the privileges granted by the permit should be subject to the terms, conditions, and limitations contained in the attached permit, and to such other reasonable terms, conditions, and limitations required by the public interest as we may prescribe; 4. Nippon Cargo Airlines Company, Ltd. is substantially owned and effectively controlled by nationals of Japan; S. The issuance of this foreign air carrier permit will not constitute a "major regulatory action" under the Energy Policy and Conservation Act of 1975, as defined in section 313.4(a}(l) of our Regulations;.!.§./ 6. The public interest does not require an oral evidentiary hearing on the application; and 7. Except to the extent granted, the application of Nippon Cargo Airlines Company, Ltd. in Docket 42023 shouid be denied.
13/ See Exhibit NCA-300, pages 1-27, Docket 42023. _ T4/ ~May 6, 1985, NCA filed the requisite Certificate of Insurance which satisfies the requirements of 14 CFR Part 205. 15/ This finding is based on the fact that the grant of this permit will not result in a near-term increase in fuel consumption in excess of 10 million gallons. 7 . ACCORDINGLY, l, We issue Nippon Cargo Airlines Company, Ltd. a foreign air carrier permit, in the form attached, ~uthorizing it _to perform all-cargo services between the terminal point Tokyo, Japan, anq the c.oter.mina1 ~·------: .-,--- points San Francisco, California, and New York,- New York; - ..-
2. Nippon Cargo Airlines Coflllany, Ltd. may operate a maxil'l'llm of six wide-body roundtrip a11-cargo flights per week as of May l, 1985. and shall be permittedt by subsequent Department order, to increase its frequencies beginning April 1, 1986, by a percentage equal to the percentage increase in the total air cargo traffic between Japan and the United States for the period January l, 1985. to December 31, 1985, over the total air cargo traffic for the period January l~ 1984, to December 31, 1984, under procedures set forth in the April 30. 1985 MOU, and simi1ar1y for each succeeding year (available increased frequencies not used may be reserved for later use); 3. Flights exceeding the number described above are not authorized; 4. The exercise of the privileges granted above are subject to Nippon Cargo Airlines' compliance with the conditions listed in the permit and the Attachment to the permit, and the terms of the April 30, 1985 HOU; and 5. We will grant all motions in Docket 42023 to file otherwise unauthorized documents. 6. Unless disapproved hy the President of the United States under section BOl(a) of the Act, this order and the permit attached shall become effective on the 6lst day after its submission to the President,16/ or upon the date of receipt of advice from the President that he does not intend to disapprove the Department's order under that section, whichever is earlier; and 7. We will serve a copy of this order on all persons that have filed pleadings in Docket 42023, the Ambassador of Japan in the United States, the Secretary of State and the Federal Aviation Administration (San Francisco-FSDO #3 and AFS-220). By:
MATTHEW V. SCOCOZZA Assistant Secretary for Policy and International Affairs (SEAL)
16/ This order was submitted to the President on February 6, 1986. The 6lst day is April 10, 1986. APPENDIX A SUMMARY OF APPLICATION NIPPON CARGO AIRLINES Docket 42023 Homeland Country: Japan
Authority Covered By Bilateral Agreement: Yes-:.-Uni't:!-d .Stat:es,,.Ja'J)an Atl" ___ _ Transport Services Agreement, as amended, and the April 30~ 1985, · Memorandum of Understanding. Designated By Its Government: Yes--Exhibit 401, Docket 42023 Holds Government License For Authority Sought: Exhibit 402 - Docket 42023 Operating History: None--new applicant Aircraft Owned (O) And Leased (L): 2 B-747-200F dry-leased from A11 Nippon Airways - Aircraft will be used exclusively by NCA. Aircraft Maintenance Performed By: A11 Nippon Airways in accordance with ICAO standards. Financial Indicators (Last 2 years): April 1, 1985 April l, 1984 forecast) forecast mi 11 ions mil 1ions Total Assets $ 16.0 $ 10.0 Total Liabilities $ 7.0 Owners' Equity $ 16.0 $ 3.0 Operating Profit {Loss) (No historical financial data based on operations) Majority Ownership By Nationals Of: Japan Effective Control By Nationals Of: Japan Insurance Coverage: Yes--meets minimum requirements of 14 CFR 205 Insurance Refused Or Involuntarily Canceled During Last 3 Years: No Refused Debt Financing Last 3 Years: No Defaulted On Transportation Commit111ents Last 3 Years: No historical data avail ah le Failed To Meet Current Financial Obligations Last 3 Years: No historical data available Safety Violations During Last 5 Years: No historical data available Tariff Violations During Last 5 Years: No historical data available Subscribes To Standard Permit Conditions Regarding Insurance, to Annex 6 Of the Chicago Convention, and to C.A.B. Agreement 18900: Yes UNITED S1Alt~ Ur AMtKlLA VEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, O.C.
PERMIT TO FOREIGN AIR CARRIER
NIPPON CARGO AIRLINES COMPANY, LTD. is authorized, subject to the provisions set forth, the provisions of the Federa1 Aviation Act of 1958, as amended. and the orders, rules, and regulations of the Department of Transportation, to engage in scheduled foreign air transportation with respect to property, as follows: Between the terminal point Tokyo, Japan, and the cotermina1 points San Francisco, California, and New York, New York. This permit and the exercise of the privileges granted in it shall be subject to the terms, conditions and limitations attached, and to those contained in Order This permit shall be subject to all applicable provisions of any treaty, convention, or agreement affecting international air transportation now in effect. or that may become effective during the period this permit remains in effect to which the United States and Japan shall be parties. This permit shall be effective on • Unless otherwise terminated at an earlier date pursuant to the terms of any applicable treaty, convention, or agreement, this permit shall terminate (1) upon the dissolution or liquidation of the holder to which issued; or (2) upon the effective date of any treaty, convention, agreement or amendment, which shall have the effect of eliminating the route or routes authorized by this permit from the routes which may be operated by airlines designated by the Government of Japan (or in the event of the elimination of any part of the authorized route or routes, the authority granted shall terminate to the extent of such elimination), or (3) upon the effective date of any permit granted by the Department to any other carrier designaterl by the Government of Japan in lieu of the holder, or (4) upon the termination or expiration of either the Air Transport Services Agreement between the Government of the United States of America and the Government of Japan effective September 15, 1953, as amended, or of the Memorandum of Understanding ratified May 1, 1985: However, clause (4) of this paragraph shall not apply if, prior to occurrence of the event specified in clause (4), the operation of the foreign air transportation authorized becomes the subject of any treaty, convention, or agreement to which the United States and Japan are or shall become parties. The Department of Transportation has executed this permit and affixed its seal February 6, 1986.
MATTHEW V. SCOCOZZA Assistant Secretary for Policy and International Affairs (SEAL) ATTACHMENT PERMIT TO FOREIGN AIR CARRIER Docket 42023
The holder's authority to conduct operations uiTder the permit to which this is attached sha11 also be subject to the following terms. -conditfi)ris, ind ·- - limitations: -
(1) The privileges granted by this permit are subject to the condition that the foreign air carrier complies with the requirements of 14 CFR 203, concerning waiver of Warsaw Convention liability limits and defenses;
{2) The privileges granted by this permit are subject to the condition that the foreign air carrier complies with the requirements for minimum insurance coverage contained in 14 CFR 205;
(3) By accepting this permit, the holder waives any right it ~ay possess to assert any defense of sovereign imm.inity from suit in any action or proceeding instituted against the holder in any court or other tribunal in the United States (or its territories or possessions) based upon any claim arising out of operations by the holder under this permit; (4) The holder shall not operate any aircraft under the authority granted by this permit, unless the holder complies with operational safety requirements at least equivalent to Annex 6 of the Chifago Convention; (5) The holder shall conform to the airworthiness and airman co""etency requirements prescribed by its home Government for international air servi te; (6) Except as specifically authorized by the Department of Transportation, all flights to/from the United States must originate or tenninate 1n the holder's homeland; (7) The holder shall not provide the foreign air transportation authorized by this permit unless it holds a currently effective authorization from 1ts Government for such operations and such document is on file with the Department of Transportation;
(8) The exercise of the privileges granted by this permit shall be subject to such other reasonable terms, conditions, and limitations required by the public interest as may be prescribed by the Department of Transportation; and shall be subject to compliance with all applicable orders and regulations of other U.S. agencies and courts, and with all applicable laws of the United States; and (9) This permit cannot be sold or otherwise transferred without explicit Department approval under section 402(g) of the Federal Aviation Act of 1958, as amended.
* *
5/85 . THE WHITE HOUSE
WASH I NG TON
March 7, 1986
MEMORANDUM FOR DAVID L. CHEW • STAFF SECRETARY FROM: JOHN G. ROBERT~/? ASSOCIATE COUN~H\.-PRESIDENT SUBJECT: DOT International Aviation Decisions: Certain Canadian Air Carriers and Nippon Cargo Airlines
Our office has reviewed the above-referenced Department of Transportation International Aviation decisions, and has no legal objection to the procedure that was followed with respect to Presidential review of such decisions under 49 u.s.c. § 146l(a).
We also have no legal objection to OMB's recommendation' that the President not disapprove these orders or to the substance of the letter from the President to the Secretary of Transportation. 10 , ______c__ u__.
WHITEHOUSE CORRESPONDENCE TRACKING WORKSHEET
O 0 • OUTGOING 0 :M ·INTERNAL 0 I ·INCOMING ,Date Correspondence 'fleceived (YV/MM/00} --·~I--''~-- .Name of Correspondent:-=~=·~'-=--""""""","""""",'--. _,,., ______
0 Ml Mail Report User Codes:
ROUTE TO:
Trackmg 'ifype :Date · of Offlce/A:gency {Staff 'Name) 'YYIMM/1l1l Response
ORIGINATOR ·rg/j//JJ101
Referral No~: ti.1 1031/J 1 Referral Note;
I J
:Referrat Note: J
;ACTION COOES: OISPOSfftON CODES: A· Appropriate.Action i '· •1rlfo Copy:Onty/No :Action :t.leoessary A • Answered .c -Qlmpteted C ·Comment/Recommendation R • Direct.Reply w/Copy B • Non-Special ·R~ferral S ·.Suspended D ·:Draft Response S · .Jfor Signature F · Furnish 'Fact Sheet X · interim fleply to lie used as Enclosure FOR OUTOOJNG CORRESPONDENCE:
Type of Response 2 •Initials of Signer Code = ..,,. .. Completion Date = ,Pate of Outgoing Comments: ______
Keep this worksheet attached to the original incoming letter. Send all routing updates to Central Reference (Room 75, OEOB). Always return completed correspondence record to Central Files. Refer questions about the correspondence tracking system to Central Reference. ext. 2590. 5181 Document No. ------
WHITE HOUSE STAFFING MEMORANDUM
DATE: __3_/_0 6_/_8_6 __ ACTION/CONCURRENCE/COMMENT DUE BY: 3/13/86 . SUBJECT: DOT INTERNATIONAL AVIATION DECISIONS: CERTAIN CANADIAN AIR CARRIER & NIPPON CARGO AIRLINES
ACTION FYI ACTION FYI VICE PRESIDENT 0 0 LACY 0 0 REGAN 0 0 POINDEXTER 0 0 MILLER 0 0 RYAN 0 0 BALL 0 0 SPEAKES 0 0 BUCHANAN 0 0 SPRINKEL CHAVEZ 0 0 SVAHN CHEW OP OSS THOMAS 0 0 DANIELS 0 TUTTLE 0 0 FIELDING•----· 0 0 0 HENKEL 0 0 0 HICKS 0 0 0 0 KING ON 0 0 0 0
REMARKS: Please provide any comments/recommendations by Thursday, March 13th. Thank you.
RESPONSE:
David L. Chew Staff Secretary Ext. 2702 EXECUTIVE OFFICE OF THE PRESIDENT OFFICE OF MANAGEMENT AND BUDGET WASHINGTON. D.C. 20503 March 6~ 1986 ACTION MEMORANDUM FOR THE PRESIDENT SUBJECT: Department of Transportation International ... Aviation Decisions:
Certain Canadian Air Carriers Nippon Cargo Airlines Dockets 40848, 40996, 42197, Company, Ltd. 42121, 39403, 40410 Docket 42023 and 40411 Date due: April 9, 1986 Date due: March 28, 1986
The Department of Transportation (DOT) proposes to take the following action with regard to the above international aviation cases: Authorize certain Canadian air carriers, to engage in scheduled foreign air transportation of persons, property and mail between Canada and the United States. Authorize Nippon Cargo Airlines Company, Ltd., to engage in scheduled foreign air transportation of property between Japan and the United States.
~he National Security Council and the Departments of State, Defense, and Justice have not identified any foreign policy or national defense reasons for disapproving the orders in whole or in part.
~he Off ice of Management and Budget recommends that you approve DOT's decisions by signing the attached letter to the Secretary which indicates that you do not intend to disapprove DOT's orders within the 60 days allowed by statute for your re~iew. ~~ Carol T. Crawford Associate Director for Economics and Government
Attachments: DOT letters of transmittal DOT orders Letter to the Secretary 2
Options and Implementation Actions:
) ( 1) Approve DOT's orders (DOS, DOD, DOJ, NSC, OMB). -- Sign the attached letter to the Secretary.
) ( 2) Disapprove DOT's orders. -- Implementation materials to be prepared.
) ( 3) See me. THE WHITE HOUSE
WASHINGTON
Dear Madam Secretary:
I have reviewed the orders proposed by the Department of Transportation in the following cases:
Certain Canadian Air Carriers Nippon Cargo Airlines Dockets 40848, 40996, 42197, Company, Ltd. 42121, 39403, 40410 Docket 42023 and 40411
I have decided not to disapprove the proposed orders.
Sincerely,
The Honorable Elizabeth Dole Secretary of Transportation Washington, D.C. 20590 UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D. C.
Issued by the Department of Transportation on the 27th .d~y of Januaryr 19~~ ------. Applications of . AUSTIN AIRWAYS LIMITED Dockets 40848 AIR ONTARIO LIMITED . 40996 42197 BRADLEY AIR SERVICES LIMITED . 42121 d/b/a FIRST AIR QUEBEC AVIATION LIMITED .• 39403 TORONTO AIRWAYS LIMITED . 40410 d/b/a TORONTAIR . 40411 . for foreign air carrier permits under . section 402 of the Federal Aviation Act of 1958, as amended . ------t ORDER ISSUING FOREIGN AIR CARRIER PERMITS Applications Each of the above-noted Canadian carriers filed one or n:>re applications for foreign air carrier permits to conduct scheduled foreign air transportation of persons, property, and mail between specified paints in the United States and Canada, using commuter size aircraft (aircraft with 60 or fewer seats). l/ The carriers rely upon the 1966 Exchange of Notes (Regional Notes) between the United States and Canada as the basis for the authority sought. 2/ The route authority requested by each carrier is as follows:
17 Each application was noticed in the Federal Register. See Attach ment B for the Federal Register citation of each application. 21 Also, Kelowna Flightcraft Air Charter Ltd. d/b/a Inter City Air, filed a request in Docket 42095 for authority under the Regional Notes to conduct scheduled service between Penticton, British Columbia, and Spokane, WA. The Civil Aeronautics Board issued the carrier long-term exemption authority, effective August 20, 1984 (see Order 84-10-64), to conduct the service. However. Kelowna has never conrnenced 1t. On December 5, 1985, the company informally advised Department staff that 1t no 1onger has a firm proposal to conduct Penticton-Spokane service and will withdraw its request in Docket 42095 in the near future. - 2 - Carrier Route Requested Austin Airways limited Thunder Bay, Ontario-Minneapolis, (Austin Airways) MN Air Ontario limited London, Ontario-Cleveland, OH (Air Ontario) Toronto. Ontario-Hartford, CT/ Springfield, MA Bradley Air Services limited Ottawa, Ontario-Boston, MA !f d/b/a First Air Quebec Aviation limited Quebec City, Quebec-Boston, MA 4/ (Quebec Aviation) Toronto Airways limited Toronto (Buttonville), Ontario d/b/a Torontair White Plains, NY Toronto (Buttonville), Ontario Syracuse, NY
Attachment A to this order contains a description of each application, and a discussion of the pleadings in each case. Briefly, answers have been filed to four of the seven applications. Three answers are objections to the grant of authority, because of reciprocity problems between the United States and Canada which existed at the time the answers were filed. As discussed later in this order, a U.S.-Canada intergovernmental agreement nCM specifically provides for the authority sought by the applicants and effectively responds to the problems which prompted objections to the applications. Therefore, we believe those objections are now moot. The other answer is an objection to the name one applicant has chosen. We discuss, infra, the basis of our decision not to prevent the particular applicant from using its chosen name.
3/ First Air also seeks permission under Part 215 of the Department's rules to use the name First Air. We will dismiss this request as m:>Ot, because no additional authority is needed for Bradley Air Services limited d/b/a First Air to do business under a name that is readily identifiable with the name in which its operating authorization is issued. (See section 215.2 of the Department's rules.) ~ ~ On November 2, 1984, Quebec Aviation withdrew its request for authority to serve two other routes--Sherbrooke-Boston and Quebec City Portl and, ME. Therefore, we will consider Quebec Aviation's application to the extent it seeks a foreign air carrier permit to serve Quebec City Boston. - 3 - Background On June 21, 1984, the United States and Canada signed a Memorandum of Consultations (MOC) which, among other things, contains two ad referendum agreements: one providing for an experimental transborder air-services program at Mirabel Airport in Montreal, Canada; the second outlining a new exchange of notes on regional, local and commuter services replacing the previous, 1966 notes. In addition, the MOC provides for expeditious action on applications for regional and local services already pending before the respective aeronautical authorities, including the Canadian applications for authority at issue here. The MOC also anticipates that the United States will take expeditious and favorable action on specified Canadian route applications, and anticipates that Canada will take expeditious and favorable action to grant Empire Airlines authority to serve the routes Syracuse-Ottawa and Syracuse-Montreal. §_/ On August 21, 1984, the United States and Canada exchanged diplomatic notes which placed in force the ad referendum agreements entered into on June 21, 1984. Each of the applicants has been granted authority to conduct its proposed operations pursuant to exemption authority issued by the Civil Aeronautics Board or the Department (see Attachment A). Decision We have reviewed the record of each case, including the applications, which are summarized in Attachment B, and have decided to grant the requests using the simplified Subpart Q procedures. 6/ The public was informed of each carrier's application by notices in-the Federal Register and the Board's weekly list of applications filed, describing the authority sought and giving interested persons an opportunity to submit evidence and objections to the award of the authority. The notices provided the required notice and filing opportunities. Simplified procedures are appropriate in this case, because there are no issues that would require a different process.
5/ Empire's applications were subsequently approved by Canadian authorities, and Empire continues to serve both markets. §./ 14 CFR 302.1701 et~· Under Rule 29(b), the Department may in its discretion omit a tentative decision in proceedings under Subpart Q and proceed directly to a final decision, after provision of an opportunity for interested parties to submit evidence and to support or object to grant of authority under section 402 of the Act. - 4 - All of the authority we confer here is provided for in the August 21, 1984, Exchange of Diplomatic Notes governing regional, local and c011111Uter services. 7/ This consideration provides a strong basis for finding that a grant of-the authority sought by each applicant is consistent with the public interest. Moreover, no other factors warrant a different conclusion. The understanding reflected in the exchange, as noted above, effectively deals with the concerns that prompted the U.S. carriers to object on the basis of defective Canadian reciprocity. As to Air One's objection to the name First Air, we find the possibility of confusion to be negligible. In this connection, we agree that neither Air One nor First Air can claim an exclusive right to the word •Air,• as both carriers note. Further, the words •one" and •first• are distinct--•one• is a cardinal number, and "first" is an ordinal number. Moreover, the placement of these words in each carrier's name is reversed. The combination of these factors results in two carrier names which are easily distinguishable, and clearly different. Therefore, we do not find that the public will be confused by the names Air One and First Air. Fitness/Ownership and Control Each carrier's fitness can be determined based on the submission of evidence in the dockets. No party has challenged the fitness of any of these applicants. All the carriers are Canadian local service airlines which provide scheduled and/or charter air services within Canada. Except for Quebec Aviation and Torontair, the carriers have held, for several years, foreign air carrier permits, issued by the Civil Aeronautics Board, authorizing charter passenger services into the United States using large aircraft. Quebec Aviation is registered under Part 294 of the Department's rules as a Canadian charter air taxi operator to perform charter services between the two countries, using small aircraft. Torontair is also registered under Part 294 and holds a foreign air carrier permit authorizing
71 Notes 300 (U.S.) and ETT-1483 (Canada) formalized the U.S.-Canada understanding achieved June 18-20, 1984, and recorded in a Memorandum of Consultation on June 21, 1984. This Exchange of Notes replaced the Exchange of Notes of 1966, on which the applicants relied. The applications were filed before the 1984 Exchange of Notes was signed. - 5 - scheduled foreign air transportation between Kingston, Ontario, Canada, and Syracuse, New York, using small aircraft. The financial statements filed by the carriers show that they are financially sound. !f All the carriers have on file with the Department certificates of insurance which comply with the aircraft accident liability requirements of Part 205 of the Department's rules. In addition, each carrier states that for the last three years: its insurance has not been refused or involuntarily canceled; it has not been refused debt financing; it has not defaulted on transportation commitments; it has not failed to meet current financial obligations; and it has had no safety or tariff violations. Our review of the record in this proceeding discloses no information that contradicts these statements. In addition, the carriers subscribe to the standard permit conditions regarding insurance, Annex 6 of the Chicago Convention, and have waived the liability limits of the Warsaw Convention. Each applicant carrier has demonstrated that it is owned and controlled by Canadian citizens. In view of the foregoing and all the facts of record, we find and conclude that: 1. Each applicant is fit, willing and able properly to perform the foreign air transportation described in the attached permits and to conform to the provisions of the Act, and the Department's rules, regulations and requirements; 2. The public interest requires that the exercise of the privileges granted by the permits shall be subject to the terms, conditions, and limitations contained in the attached permits, and to such other reasonable terms, conditions, and limitations required by the public interest as we may prescribe; 3. Each applicant is substantially owned and effectively controlled by nationals of its homeland country; 4. Issuance of these foreign air carrier permits will not constitute a umajor regulatory action" under the Energy Policy and Conservation Act of 1975, as definen in subsection 313.4(a)(l) of the Department•s Regulations; J.f and 5. The public interest does not require oral evidentiary hearings on the applications.
S/ Two of the carriers, Air Ontario and Austin Airways filed motions to withhold their financial statements from public disclosure (see Dockets 40996, 42197 and 40848). These carriers have shown good cause not to release their financial information to the public. Also, the Canadian Government has granted U.S. carrier requests for similar confidential treatment. Therefore, we will grant the motions. J.j Our finding is based upon the fact that each applicant's permit will not result in a near-ter'fl'I annual increase in fuel consumption in excess of 10 million gallons. ... 6 - ACCORDINGLY, 1. We are issuing, in the form attached, a foreign air carrier permit to each applicant authorizing scheduled foreign air transportation of persons, property, and mail as follows: Between Thunder Bay, Ontario, Canada, and Minneapolis, Minnesota, for Austin Airways Limited; Between London, Ontario, Canada, and Cleveland, Ohio; and between Toronto, Ontario, Canada, and Hartford, Connecticut/Springfield, Massachusetts, for Air Ontario Limited; Between Ottawa, Ontario, Canada, and Boston, Massachusetts, for Bradley Air Services Limited d/b/a First Air; Between Quebec City, Quebec, Canada, and Boston, Massachusetts, for Quebec Aviation Limited; and Between Toronto (Buttonville), Ontario, Canada, and White Plains, New York, and between Toronto {Buttonville), Ontario, Canada, and Syracuse, New York, for Toronto Airways Limited d/b/a Torontair; 2. We grant the motions of Air Ontario Limited and Austin Airways Limited in Docket 40996, 42197, and 40848 for permission to withhold financial information from public disclosure; 3. We grant the motions of Air Ontario Limited; Austin Airways Limited; Empire Airlines, Inc.; Mall A~rways, Inc.; and Air One, Inc. in Dockets 40996, 40848, 40411, and 42121 for leave to file otherwise unauthorized documents; 4. We deny, except to the extent granted, the applications and other requests for relief in Dockets 40848, 40996, 42197, 42121, 39403, 40410, and 40411; 5. The permits shall be signed and the Department's seal affixed; 6. Unless disapproved by the President of the United States under section BOl(a) of the Act, this order with the attached permits shall become effective on the 6lst day after its submission to the President, 10/ or upon the date of receipt of advice from the President that he doesnot intend to disapprove the Department's order under that section whichever is earlier; and
10/ This order was submitted to the President on January 27, 1986. ihe 61st day is March 29, 1986. - 7 - 7. We shall serve this order on each applicant; Kelowna Flightcraft Air Charter Ltd. d/b/a Inter City Air; Empire Airlines, Inc.; Mall Airways, Inc.; Air One, Inc.; the Ambassador of Canada in Washington, D.C.; and the Department of State. By:
MATTHEW V. SCOCOZZA Assistant Secretary for Policy and International Affairs
(SEAL) Attachment A Page 1 of 6 DESCRIPTION OF APPLICATIONS AND COMMENTS
Air Ontario Limited, Docket 40996 By application filed September 17, 1982, Air Ontario Limited requests a foreign air carrier permit to engage in scheduled foreign air transportation of persons, property, and mail between London, Ontario, Canada, and Cleveland, Ohio. The applicant also filed a motion to withhold its financial information from public disclosure. !./ In support of its application, Air Ontario states that it is owned and controlled by Canadian citizens and that it has been licensed by its government to perform the services requested. Air Ontario further states that the authority requested is consistent with the 1966 Regional Notes. Air Ontario states that it has been successfully providing service between the two points by exemption authority since April 1982 when it replaced Air Canada which terminated 40 years of service in the market on January 9, 1982. :£.! On July 12, 1983, Air Ontario filed a request for expedited treatment of its permit application in Docket 40996. Air Ontario states that until a permit has been issued, it cannot enter into interline agreements with any U.S. carriers; that this situation prevents it from writting through tickets, negotiating joint fares, and sharing reservation systems; and that the resulting inability of Air Ontario to interline passengers with other air carriers causes suQstantial inconvenience and financial penalty not only to Air Ontario, but to the traveling public as well. On July 21, 1983, Empire Airlines, Inc. and Pilgrim Aviation and Airlines, Inc. each filed an answer to Air Ontario's application. Generally, Empire and Pilgrim both argue that action on Air Ontario's request should be deferred until the Canadian authorities take favorable action on their applications before the Canadian Government for authority under the Regional Notes.
1/ We will grant this motion. See footnote 8 of this order. 2./ By Order 82-4-126, Air Ontar~was granted an exemption to perform "Scheduled service carrying persons and property between London, Ontario, and Cleveland, Ohio, through September 30, 1982. By Order 82-12-9, this authority was renewed for one year, until September 30, 1983. On September 16, 1983, as amended on September 22, 1983, Air Ontario filed for renewal of its exemption authority in Docket 40520 and invoked the automatic extension provisions of the Administrative Procedure Act. Since this renewal application has not yet been acted upon, Air Ontario's London-Cleveland exemption remains in effect until final action on the renewal request in Docket 40520. Attachment A Page 2 of 6
Air Ontario filed a reply to the answers on August 16, 1983. 3/ Briefly, Air Ontario states that both U.S. carriers fafl to recognize that it fs operating and seeking permanent authority for replacement of service previously conducted by Air Canada, while, on the other hand, Empire and Pilgrim are seeking authority to institute new and/or expanded services; and that ft would be unfair to the travelling public and counterproductive to u.s.-canada relations to deny Air Ontario the right to continue the London-Cleveland service. Air Ontario Limited, Docket 42197 On May 11, 1984, as amended on June 8, 1984, Air Ontario Limited filed an application for a foreign air carrier permit to engage in scheduled foreign air transportation of persons, property, and mail between Hartford, Connecticut/Springfield, Massachusetts, and Toronto, Ontario, Canada, using 55-seat Convair 580 aircraft. In addition, Air Ontario has filed a motion to withhold its financial information from public disclosure. 4/ · In support of its application, Air Ontario states that it fs owned and controlled by Canadian citizens; that it holds a Canadian license to provide the proposed service; that the Canadian authorities have issued the same authority to a U.S. carrier; and that it has been operating corrmercial air services in Canada since 1961. 5/ Also, Air Ontario states that its proposed service is regional in nature, and therefore is consistent with the 1966 Regional Notes; and that its services are consistent with the public interest since no direct service is provided in the market. §.! No answers to the application have been filed. Austin Airways Limited, Docket 40848 By application filed July 16, 1982, Austin Airways Limited requests a foreign air carrier permit to engage in scheduled foreign air transportation of persons, property, and mail between Thunder Bay, Ontario, Canada, and Minneapolis, Minnesota. Austin Airways has also filed a motion to withhold its financial information fran public disclosure. ll
3/ The reply was accompanied by a motion to file an otherwise unauthorized document, which we will grant. 41 We will grant this notion. See footnote 8 of this order. TJ; Air Ontario is the predecessor--company to Great Lakes Airlines Limited. In 1980 Great Lakes Airlines was the surviving company of three Canadian companies that ~ere amalgamated. Later, in 1981, the nane of Great Lakes Airlines was changed to Air Ontario Limited. 6/ By Civil Aeronautics Board Order 84-10-64, October 16, 1984, Air CJntario was issued exemption authority to conduct scheduled services between Toronto and Hartford, CT/Springfield, MA. On September 12, 1985, after a short lapse, this authority was reinstated. LI We will grant this motion. ~footnote 8 of this order. Attachment A h~3~6
In support of its application, Austin Airways states that the proposed services are governed by the 1966 U.S.-Canada Regional Notes; that it holds the appropriate licenses from its government to provide the desired services; and that it has been successfully conducting scheduled services over the proposed route, which are the only direct services available between Thunder Bay and the United States. !I On August 4, 1983, Empire Airlines, Inc. filed an answer to Austin Airways' application. In its answer, Empire discusses problems it has been encountering with the Canadian Government in seeking approval of services under the Regional Notes and requests that no further favorable action be taken on Austin's request until the Canadian authorities act favorably on Empire's pending Syracuse-Montreal/Toronto/Ottawa applications.
On August 31. 1983. Austin Airways filed a reply to Empire's objection. ~/ Generally, Austin states that it would be unfair to the travelling public and counterproductive to improving U.S.-Canada relations to deny Austin the right to continue scheduled services in the Thunder Bay-Minneapolis market pursuant to a section 402 permit. Bradley Air Services Limited d/b/a First Air, Docket 42121 On April 12. 1984, Bradley Air Services limited d/b/a First Air filed an application for a foreign air carrier permit authorizing it to provide scheduled foreign air transportation of persons, property, and mail between Ottawa, Ontario, Canada, and Boston, Massachusetts. Also, First Air requests permission under Part 215 to use the trade name First Air. 10/ First Air plans to conduct twelve nonstop round-trip flights per week over the route, using HS-748 aircraft in a 44-seat configuration.
~I Austin Airways has been providing scheduled services between Thunder Bay and Minneapolis for some time in accordance with its exemption authority. Initially the exemption authority was issued to Superior Airways. After the amalagmation of Austin and Superior, we tranferred Superior's exemption authority to Austin. (See Orders 81-7-157. 82-4-143. and 82-10-75.) ~I Austin's reply was accompanied by a motion for leave to file an otherwise unauthorized document. We will grant the motion. 10/ We will dismiss this request as moot. No additional authority is needed for Bradley Air Services Limited d/b/a First Air to do business under a name that is readily identifiable with the name in which its operating authorization is issued. (See section 215.2 of the Department's rules.) Attachment A Page 4 of 6
In support of its application, First Air states that it is a Canadian corporation owned and controlled by Canadian citizens; that 1t has been operating corrmercial air services in Canada since 1946; that it conducts charter passenger services into the United States under its foreign air carrier permit; and that it is fit, willing, and able properly to perfonn the requested air transportation and to confonn to the provisions of the Act and the rules, regulations, and requirements of the Department. In addition, First Air states that the Canadian authorities have licensed both First Air and Pilgrim Airlines to provide scheduled service between Ottawa and Boston, which shows that reciprocity exists; that there is a public need for the service since no airline provides nonstop scheduled services over the route and passengers and cargo must therefore make time consuming, expensive and circuitous connections; and that First Air's services would make possible same-day roundtrip business travel between two major metropolitan areas. !!/ On May 10, 1984, Air One, Inc., filed an answer to First Air's application. 12/ Air One states that it does not object to the route authority, gnr-se, but objects to the carrier's use of the name •first Air.• Air ne believes that the close connection between •one• and •first" would unduly confuse the travelling public, travel agents, and other members of the trade; that it has spent signifi~ant amounts of money to purchase exclusive rights to the name Air One and to advertise in newspapers, radio and television the company name, and its unique services; and that the similarity of names would significantly damage Air One's national reputation anq undermine its ability to develop and market its product at Boston and otHer national markets. First Air did not file a reply to Air One's answer in this proceeding. 13/
ll/ By Civil Aeronautics Board Order 84-10-64, First Air was issued exemption authority to provide scheduled services between Ottawa and Boston. On August 16, 1985, ·First Air filed for renewal of its exemption authority and invoked the automatic extension provisions of the Administrative Procedure Act. Therefore, First Air's exemption authority remains in effect until we take final action on this renewal application in Docket 42120. 11J Air One's answer was accompanied by a motion to file an otherwise unauthorized document. We will grant the motion. 13/ First Air did reply to Air One's answer that was filed in the exemption proceeding. See Docket 41220 and Civil Aeronautics Board Order 84-10-64. ~ Attachment A Page 5 of 6
Quebec Aviation Limited, Docket 39403 By application filed March 10. 1981. Quebec Aviation Limited requests a foreign air carrier permit to engage in foreign air transportation of persons, property, and mail between Quebec City, Quebec, Canada, and Boston, Massachusetts • .!!/ In support of its application, Quebec Aviation states that the authority sought is provided for under the 1966 •Regional Notes• between the United States and Canada; that it is owned and controlled by Canadian citizens; and that no other carrier provides service over the proposed route. 15/ No answers to the application have been filed. Toronto Airways Limited d/bla Torontair, Docket 40410 By application filed January 22, 1982, Toronto Airways Limited d/b/a Torontair requests a foreign air carrier permit authorizing it to provide scheduled foreign air transportation of persons and property between Toronto (Buttonville}, Ontario, Canada, and White Plains, New York, using small aircraft • .!.§./ In support of its application, Torontair refers to information in Docket 36932 to show that it is owned and controlled by Canadian citizens; that it is fit to provide the proposed service in a safe and reasonable manner; and that its maintenance program and crew requirements comply with the requirements specified by the Canadian aviation authorities. Also,
14/ Quebec Aviation originally sought a permit to conduct scheduled service between Sherbrooke, Quebec-Boston; between Quebec City, Quebec-Portland, Maine; and between Quebec City-Boston. By letter dated October 25, 1984, the carrier advised that its Canadian license had been amended authorizing services only between Quebec City-Boston. Therefore, Quebec Aviation stated that it seeks a permit for the route Quebec City-Boston, and that it withdraws its request for the other two routes. 15/ Quebec Aviation currently provides scheduled services between Quebec Clty and Boston, using Reechcraft aircraft, in accordance with its exemption authority (see Orders 81-7-131, 82-9-73, and 84-8-65). 16/ By Civil Aeronautics Board Order 83-1-80, Torontair was granted a one-year exemption to perform these scheduled services, until January 23, 1984. On November 18, 1983, Torontair filed for renewal of its exemption authority and invoked the automatic extension provisions of the Administrative Procedure Act. Therefore, Torontair's exemption authority remains in effect until we take final action on this exemption renewal application (see Docket 41094). Attachment A Page 6 of 6
Torontair states that it holds the appropriate Canadian licenses to provide the proposed scheduled service; that many corporations with major offices in the Toronto and White Plains areas have shown a need for direct, nonstop service; and that its request is within the spirit of the 1966 Regional Notes between the United States and Canada. No answers to the application have been filed. Toronto Airways limited d/b/a Torontair, Docket 40411 By application filed January 22, 1982, Toronto Airways Limited d/b/a Torontair requests a foreign air carrier pennit so as to engage in scheduled foreign air transportation of persons and property between Toronto {Buttonville), Ontario, Canada, and Syracuse, New York, using small aircraft. 11.l In support of its application. Torontair refers to information in Docket 36932 to show that it is owned and controlled by Canadian citizens; that it is fit to provide the proposed service in a safe and reasonable manner; and that its maintenance program and crew requirements comply with the requirements specified by the Canadian aviation authorities. Torontair states that several businesses have indicated a need for direct service in the proposed market; that tourist travel should benefit from direct services as well; and that the proposed operation is within the spirit of the 1966 Regional Notes. On June 28, 1982, Mall Airway~, Inc. filed an answer to Torontair's application. 18/ Mall states that the Canadian authorities have denied its application for Syracuse-Toronto authority on the basis that Torontair holds a Canadian license to provide scheduled services in the market, and that this market is not large enough to support service by two carriers. Mall believes that the Canadian Government's action violates the spirit of the Regional Notes and asks that we not grant Torontair's application until the Canadian Transport Coll'lllission reverses its decision, and allows it to operate service between Syracuse and Toronto. (Hall subsequently obtained Canadian authority and started serving Toronto-Syracuse.)
l7/ By Civil Aeronautics Board Order 83-6-18, Torontair was granted a one-year exemption to perform these scheduled services, until May 13, 1984. On March 12, 1984, Torontair filed for renewal of its exemption authority and invoked the automatic extension provisions of the Administrative Procedure Act. Since this renewal application has not yet been acted upon, Torontair's exemption authority remains in effect until final action on the exemption renewal application (see Docket 41396). 18/ Mall's answer was accompanied by a motion for leave to file an otherwise unauthorized document, which we will grant. Attachment B Page 1 of 4 SUMMARY OF APPLICATIONS Applicant: Austin Airways Limited Docket No: 40848 Federal Register Cite: 47 FR 31909, July 23, 1982 Charter Permit Issued By Order 77-3-46, effective March 5, 1977 Authority Covered By: U.S.-Canada Exchange of Notes, dated August 21, 1984. Holds Government License For Authority Sought: Exhibit No. 3 Operating History: Conducted conmercial air services for 50 years; serves 50 communities on scheduled basis throughout Ontario, Quebec, and NW Territories; and provides charter services within Canada and between the U.S. and Canada. Fleet: 8 single and multi-engine Cessna; 2 DHC-3 Otter; 8 HS-748; 3 DC-3; and 11 DHC-6. Aircraft Maintenance Performed By: Austin Airways at Thunder Bay, Ontario Financial Indicators: At applicant's request this information is withheld from public disclosure. Our review of its financial statements for CY 1980 and 1981 demonstrate that it is in sound financial condition, and show that it earned a prof it in each of those years. * * * * * Applicant: Air Ontario Limited Docket Nos. 40996 and 42197 Federal Register Cite: 47 FR 42130, September 24, 1982, and 49 FR 21556, May 22, 1984 Charter Permit Issued By Order 82-4-37, effective April 23, 1982 Authority Covered By: U.S.-Canada Exchange of Notes, dated August 21, 1984. Holds Government License For Authority Sought: Exhibit 3, Docket 40996; and Exhibit 3 and correspondence section of Docket 42197. Operating History: Domestic Canada serve since 1961 as Great Lakes Airlines Limited. Narre changed to Air Ontario Limited, April 1982 (Order 82-4-37). Initial permit issued May 20, 1965, Order E-22201. Aircraft Owned: 5 Convair 580 turbo-props . . Attachment B Page 2 of 4 SUMMARY OF APPLICATIONS
Aircraft Maintenance Perfonned By: Air Ontario provides the majority of its aircraft maintenance, with the exception of engine and airframe overhauls, at its Sarnia, Ontario facility. Financial Indicators: At applicant's request this infonnation is withheld from public disclosure. Our review of its financial statements for the year ended 9-30-83 and for nine lll>nths ended 9-30-82 demonstrate that Air Ontario is in sound financial condition and show that it earned a profit in 1983.
* * * * *
Applicant: Bradley Air Services Limited d/b/a First Air Docket No. 42121 Federal Register Cite: 49 FR 17058, April 23, 1984 Charter Permit Issued By: Order 80-9-48, effective September 11, 1980 Authority Covered By: U.S.-Canada Exchange of Notes, dated August 21, 1984. Holds Government License For Authority Sought: Exhibit No. 5 Operating History: First Air has conducted charter operations within Canada for more than 30 years, and has provided scheduled services within Canada for 10 years. Aircraft Owned: 3 HS-748, 4 DC-3, 3 DHC-6, and l 018S Aircraft Leased: 5 DHC-6, 1 DHC-2, and 1 C-500 Aircraft Maintenance Performed By: First Air performs own maintenance in its facility located at Carp, Ontario. Financial Indicators For Years Ending: Dec. 31, 1983 Dec. 31, 1982 (000) (000) Total Assets $ 12,182 $ 13,126 Total Liabilities 9,673 10,974 Owners' Equity 2,509 2,153 Net Profit (Loss) 431 151
* * * * * Attachment 8 Page 3 of 4 SUMMARY OF APPLICATIONS
Applicant: Quebec Aviation Ltd. Docket No. 39403 Federal Register Cite: 46 FR 17817, March 20, 1981 Registered Under Part 294: Yes, Registration No. so. dated October 22, 1982. Authority Covered By: U.S.-Canada Exchange of Notes, dated August 21, 1984. Holds Government License For Authority Sought: Yes. See correspondence section, letter dated October 25, 1984. Operating History: Quebec Aviation was founded in 1961. Currently serves points throughout the Provinces of Quebec and Ontario and the Maritimes. In addition to providing domestic and international charter services, the carrier offers specialty flight services. Aircraft Owned (O) And leased (L): 16 Cessna--14(0) 2(L), and 9 Piper-- 6(0) 3{L} Aircraft Maintenance Performed By: Quebec Aviation performs its own maintenance at its base of 1operations in Quebec City, Quebec. \ Financial Indicators For Years Ending: Dec. 31, 1980 Dec. 31, 1979 (000) (000) Total Assets $ 1,740 $ 1,939 Total Liabilities 1,104 1,437 Owners ' Equity 636 502 Operating Profit (Loss} 134 20
* * * * * Attachment B Page 4 of 4 SUMMARY OF APPLICATIONS
Applicant: Toronto Airways limited d/b/a Torontair Docket Nos. 40410 and 40411 Incorporates By Reference Information And Exhibits .Contained In: Docket 36932 Federal Register Cite: 47 FR 4544, January 22, 1982 Scheduled Permit Issued By: Order 80-7-96, effective July 16, 1980 Authority Covered By: U.S.-Canada Exchange of Notes, dated August 21, 1984. Holds Government license For Authority Sought: Exhibit B of each docket. Operating History: Torontair has provided charter passenger services in the Southern Ontario region for more than 20 years and has provided occasional U.S.-Canada charter services. Aircraft Owned: 6 Piper, 1 Cessna, and l Mitsubishi Aircraft Maintenance Performed By: Torontair performs its own maintenance at its home base in Toron~o-Buttonville Airport. \ Financial Indicators For Years Ending: Dec. 31. 1980 Dec. 3L 1979 (000) (ooo) Total Assets $11,116 $10,974 Total liabilities 1,701 993 Owners' Equity 9,414 9,981 Operating Profit (loss) 384 (186) UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, O.C. ------PERMIT TO FOREIGN AIR CARRIER ------AUSTIN AIRWAYS LTD. is authorized, subject to the following provisions, the provisions of the Federal Aviation Act of 1958, as amended, and the orders, rules, and regulations of the Department of Transportation, to engage in scheduled foreign air transportation of persons, property, and mail, as follows: Between Thunder Bay, Ontario, Canada and Minneapolis, Minnesota. This permit and the exercise of the privileges granted in it shall be subject to the terms, conditions and limitations attached, and to the following: 1. The holder shall not use any aircraft or conduct any operations except in accordance with the authority and conditions contained in its applicable Canadian licenses. 2. This permit shall be subject to all applicable provisions of any treaty, convention, or agreement affecting international air transportation now in effect, or that may become effective, to which the United States and Canada shall be parties. This permit shall be effective on • Unless otherwise terminated at an earlier date pursuant to the terms of any applicable treaty, convention, or agreement, this permit shall terminate (1) upon the dissolution or liquidation of the holder to which it was issued, or (2) upon the termination or expiration of the United States-Canada Exchange of - 2 -
Notes on Regional, Local, and Commuter Services {Note Nos. ETT-1483 and 300), effective August 21, 1984. However, clause (2) shall not apply 1f, prior to the occurrence of the event specified 1n clause (2), the operation of the foreign air transportation authorized becomes the subject of any treaty, convention, or agreement to which the United States and the Government of Canada are or shall become parties. The Department of Transportation has executed this perm1t and affixed 1ts seal on Janu~ry 27, 1986 •
MATTHEW V. SCOCOZZA Assistant Secretary for Policy and International Affairs
(SEAL) PERMIT TO FOREIGN AIR CARRIER Docket 40848
The holder's authority to conduct operations under the pel"'llit to tfhich this is attached shall also be subject to the following ter'llS, cond1tfons, and limitations: (1) The privileges granted by this Jertnit are subject to the condftfon that the foreign air carrier C0111>lies with the requirements of 14 CFR 203, concerning waiver of Warsaw Convention liability 11•its and defenses; (2) The privileges granted by thfs permit are subject to the condition that the foreign air carrier COft1>11es with the requir1111ents for •ini111m insurance coverage contained in 14 CFR 205; (3) By accepting this permit, the holder waives any right ft aay possess to assert any defense of sovereign 11111'11.Jnity from suit 1n any action or proceeding instituted against the holder in any court or other tribunal in the United States (or 1ts territories or possessions) based upon any claim arising out of operations by the holder under this permit; (4) The holder shall not operate any aircraft under the authority granted by this pennit, unless the holder COft1.>lfes with operational safety requirements at least equivalent to Annex 6 of the Chicago Convention;
(5} The holder shall conform to the airworthiness and 1ir11an co~etency requirements prescribed by its home Government for international air service; (6) Except as specifically authorized by the Department of Transportation, all flights to/from the United States lllJSt originate or terminate in the holder's homeland; (7) The holder shall not provide the foreign air transportation authorized by this pennit unless it holds a currently effective authorization from its Government for such operations and such document is on file with the Department of Transportation; (8} The exercise of the privileges granted by this permit shall be subject to such other reasonable terms, conditions, and limitations required by the public interest as •ay be prescribed by the Department of Transportation; and shall be subject to coq>liance with 111 applicable orders and regulations of other u.s. agencies and courts, and with all applicable laws of the United States; and (9) This permit cannot be sold or otherwise transferred without explicit Department approval under section 402(9) of the Federal Av1ation Act of 1958, as amended.
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5/85 UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, O.C.
- - - -. ~ ------PERMIT TO FOREIGN AIR CARRIER
------~ ------AIR ONTARIO LTD. is authorized, subject to the following provisions, the provisions of the Federal Aviation Act of 1958, as amended, and the orders, rules, and regulations of the Department of Transportation, to engage in scheduled foreign air transportation of persons, property, and mail, as follows: 1. Between London, Ontario, Canada and Cleveland, Ohio. 2. Between Toronto, Ontario, Canada and Hartford, Connecticut/Springfield, Massachusetts. This permit and the exercise~of the privileges granted in it shall be subject to the terms, conditions and limitations attached, and to the following: 1. The holder shall not use any aircraft or conduct any operations except in accordance with the authority and conditions contained in its applicable Canadian licenses. 2. This permit shall be subject to all applicable provisions of any treaty, convention, or agreement affecting international air transportation now in effect, or that may become effective, to which the United States and Canada shall be parties. This permit shall be effective on • Unless otherwise terminated at an earlier date pursuant to the terms of any applicable treaty, convention, or agreement, this permit shall terminate (1) upon the dissolution or liquidation of the holder to which it was issued, or (2) upon the termination or expiration of the United States-Canada Exchange of - 2 -
Notes on Regional. Local, and Co11111uter Services (Note Nos. ETT-1483 and 300). effective August 21. 1984. However, clause (2) shall not apply 1f, prior to the occurrence of the event spec1f1ed 1n clause (2) 1 the operation of the foreign air transportation authorized becomes the subject of any treaty, convention, or agreement to which the United States and the Government of Canada are or shall become part1es. The Department of Transportation has executed this permit and affixed its seal on January 27, 1986 •
MATTHEW Y. SCOCOZZA Assistant Secretary for Policy and International Affairs
(SEAL} \ AnACHMENT PERMIT TO FOREIGN AIR CARRIER Dockets 40996 42197 ' The holder•s authority to conduct operations under the pe1"111t to which this 1s attached shall also be subject to the following tet"llS. conditions. and 1111it1tions: (1) The privileges granted by this peMnit are subject to the condition that the foreign air carrier coq:>lies with the requif"l!Ments of 14 CFR 203, concerning waiver of Warsaw Convention liability limits and defenses; (2) The privileges granted by this permit are subject to the condition that the foreign air carrier coq>lies with the requirements for •ini1111m insurance coverage contained in 14 CFR 205; (3) By accepting this peMnit, the holder waives any right it 111y possess to assert any defense of sovereign 11111.1nity from suit in any action or proceeding instituted against the holder in any court or other tribunal in the United States (or its territories or possessions) based upon any claim arising out of operations by the holder under this permit; (4) The holder shall not operate any aircraft under the authority granted by this pennit, unless the holder c~lies with operational safety requirements at least equivalent to Annex 6 of the Chicago Convention; (5) The holder shall conform',to the airworthiness and airman coq>etency requirements prescribed by its home Government for international air service; · (6) Except as specifically authorized by the Depart11ent of Transportation, all flights to/from the United States 11Jst originate or terminate 1n the holder's homeland; (7) The holder shall not provide the foreign air transportation authorized by this pennit unless 1t holds a currently effective authorization from its Government for such operations and such document is on file with the Department of Transportation; (B) The exercise of the privileges granted by this permit shall be subject to such other reasonable terms, conditions, and limitations required by the public interest as •ay be prescribed by the Department of Transportation; and shall be subject to to"'11iance with all applicable orders and regulations of other U.S. agencies and courts, and with all applicable laws of the United States; and (9) Th1s permit cannot be sold or otherwise transferred without explicit Department approval under section 402(g) of the Federal Aviation Act of 1958, as 1111ended.
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5/85 UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.
------~ ------PERMIT TO FOREIGN AIR CARRIER ------BRADLEY AIR SERVICES LIMITED d/b/a FIRST AIR
is authorized, subject to the following provisions, the provisions of the Federal Aviation Act of 1958, as amended, and the orders, rules, and regulations of the Department of Transportation, to engage in scheduled foreign air transportation of persons, property, and mail, as follows: Between Ottawa, Ontario, Canada and Boston, Massachusetts. This permit and the exercise of the privileges granted in it shall be subject to the tenns, conditions and limitations attached, and to the following: 1. The holder shall not use any aircraft or conduct any operations except in accordance with the authority and conditions contained in its applicable Canadian licenses. 2. This pennit shall be subject to all applicable provisions of any treaty, convention, or agreement affecting international air transportation now in effect, or that may become effective, to which the United States and Canada shall be parties. This permit shall be effective on • Unless otherwise terminated at an earlier date pursuant to the terms of af1)' applicable treaty, convention, or agreement, this permit shall terminate {l) upon the dissolution or liquidation of the holder to which it was issued, or (2) upon the termination or expiration of the United States-Canada Exchange of - 2 -
Notes on Regional. Local, and Commuter Services (Note Nos. ETT-1483 and 300), effective August 21, 1984. However, clause (2) shall not apply 1f, prior to the occurrence of the event specified 1n clause (2), the operation of the foreign air transportation authorized becomes the subject of any treaty, convention, or agreement to which the United States and the Government of Canada are or shall become parties. The Department of Transportation has executed this permit and affixed its seal on January 27, 1986 •
MATTHEW V. SCOCOZZA Assistant Secretary for Policy and International Affairs
(SEAL) ATTACHMENT PERMIT TO FOREIGN AIR CARRIER Docket 42121
The holder's authorfty to conduct operations under the peraft to which thfs 1s attached shall also be subject to the following tef'llS, conditions, and 11mitations: (1) The privileges granted by thfs pera11ft ire subject to the condition that the foreign air carrfer t0"'11ies with the requft"'t!llents of 14 CFR 203, concerning waiver of Warsaw Convention liability li•its and defenses; (2) The privileges granted by this permit are subject to the condition that the foreign air carrier CQft1>11es with the require11ents for •fnf.,m insurance coverage contained f n 14 CFR 205; (3) By accepting this permit, the holder waives any rfght it may possess to assert any defense of sovereign 11111.1nity from suit tn any action or proceeding instituted against the holder in any court or other tribunal in the United States (or its territories or possessions) based upon any claim arising out of operations by the holder under this permit; (4) The holder shall not operate any aircraft under the authority granted by this pennit, unless the holder coq>lfes with operational safety requirements at least equivalent to Annex 6 of the Chicago Convention; (5) The holder shall conform to the airworthiness and 1fM11n co..,etency requirements prescribed by its home Government for international air service; (6) Except as specifically authorized by the Department of Transportation, all flights to/from the United States 11.1st originate or tenninate 1n the holder's homeland; (7) The holder shall not provide the foreign air transportation authorized by this permit unless it holds a currently effective authorization from its Government for such operations and such document is on file with the Department of Transportation; (8) The exercise of the privileges granted by this permit shall be subject to such other reasonable terms, conditions, and limitations required by the public interest as may be prescribed by the Department of Transportation; and shall be subject to coq>11ance with all applicable orders and regulations of other U.S. agencies and courts, and with all applicable laws of the United States; and (9) This permit cannot be sold or otherwise transferred without explicit Department approval under section 402(g) of the Federal Aviation Act of 1958, as amended.
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5/85 UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.
------~ - - - PERMIT TO FOREIGN AIR CARRIER ------QUEBEC AVIATION LIMITED is authorized, subject to the following provisions, the provisions of the Federal Aviation Act of 1958, as amended, and the orders, niles, and regulations of the Department of Transportation, to engage in scheduled foreign air transportation of persons, property, and mail, as follows: Between Quebec City, Quebec, Canada and Boston, Massachusetts. This permit and the exercise of the privileges granted in 1t shall be subject to the tenns, conditions and limitations attached, and to the following: 1. The holder shall not use any aircraft or conduct any operations except in accordance with the authority and conditions contained in its applicable Canadian licenses. 2. This penn1t shall be subject to all applicable provisions of any treaty, convention, or agreement affecting international air transportation now in effect, or that may become effective, to which the United States and Canada shall be parties. This permit shall be effective on • Unless otherwise terminated at an earlier date pursuant to the terms of any applicable treaty, convention, or agreement, this pennit shall terminate (1) upon the dissolution or liquidation of the holder to which it was issued, or (2) upon the termination or expiration of the United States-Canada Exchange of - 2 -
Notes on Regional, Local, and Commuter Services (Note Nos. ETT-1483 and 300), effective August 21. 1984. However, clause (2) shall not apply 1f, prior to the occurrence of the event specified 1n clause (2), the operation of the foreign air transportation authorized becomes the subject of any treaty, convention, or agreement to which the United States and the Government of Canada are or shall become parties. The Department of Transportation has executed this permit and affixed its seal on January 27, 1986.
MATTHEW V. SCOCOZZA Assistant Secretary for Policy and International Affairs
{SEAL) ATIACHMErtT PERMIT TO FOREJ6N AIR CARRIER Docket 39403
The holder's authority to conduct operations under the permit to whfch thts fs attached shall also be subject to the following tef'llS, conditions, end 1 imitations: (1) The privileges granted by this pennit are subject to the condition that the foreign air carrier c°""lies with the requirements of 14 CFR 203, concerning waiver of Warsaw Convention liability limits and defenses; (2) The privileges granted by this permit are subject to the condition that the foreign air carrier c°""lies with the require11ents for •ini111111 insurance coverage contained in 14 CFR 205; (3) By accepting this permit, the holder waives any right 1t may possess to assert any defense of sovereign i1111.1nity from suit in any action or proceeding instituted against the holder in any court or other tribunal 1n the United States (or 1ts territories or possessions) based upon any claim arising out of operations by the holder under this permit; (4) The holder shall not operate any aircraft under the authority granted by this pennit, unless the holder c°""lies with operational safety requirements at least equivalent to Annex 6 of the Chicago Convention; (S) The holder shall confonn to the airworthiness and airman C08')etency requirements prescribed by its home Government for international air service; (6) Except as specifically authorized by the Depart111ent of Transportation, all flights to/from the United States 11.1st originate or terminate in the holder's homeland; (7) The holder shall not provide the foreign air transportation authorized by this pennit unless 1t holds a currently effective authorization from its Government for such operations and such document is on file with the Department of Transportation; (8) The exercise of the privileges granted by this permit shall be subject to such other reasonable terms, conditions, and limitations required by the public interest as •ay be prescribed by the Department of Transportation; and shall be subject to coq:>liance with all applicable orders and regulations of other u.s. agencies and courts, and with all applicable laws of the United States; and (9) This permit cannot be sold or otherwise transferred without explicit Department approval under section 402(9) of the Federal Aviation Act of 1958, as amended.
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5/85 UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, O.C.
PERMIT TO FOREIGN AIR CARRIER ------TORONTO AIRWAYS LIMITED d/b/a TORONTAIR is authorized, subject to the following provisions, the provisions of the Federal Aviation Act of 1958, as amended, and the orders, rules, and regulations of the Department of Transportation, to engage 1n scheduled foreign air transportation of persons, property, and mail, as follows: 1. Between Toronto (Buttonville), Ontario, Canada and White Plains, New York. 2. Between Toronto (Buttonville), Ontario, Canada and Syracuse, New York. This permit and the exercise of the privileges granted in it shall be subject to the terms, conditions and limitations attached, and to the following: 1. The holder shall not use any aircraft or conduct any operations except in accordance with the authority and conditions contained in its applicable Canadian licenses. 2. This permit shall be subject to all applicable provisions of any treaty, convention, or agreement affecting international air transportation now in effect, or that may become effective, to which the United States and Canada shall be parties. This permit shall be effective on • Unless otherwise terminated at an earlier date pursuant to the terms of any applicable treaty, convention, or agreement, this permit shall terminate (1) upon the dissolution or liquidation of the holder to which it was issued, or (2) upon the termination or expiration of the United States-Canada Exchange of - 2 -
Notes on Regional, Local, and C011111Uter Services (Note Hos. ETT-1483 and 300), effective August 21, 1984. However, clause (2) shall not apply 1f, prior to the occurrence of the event specified in clause (2), the operation of the foreign air transportation authorized becomes the subject of any treaty, convention, or agreement to which the United States and the Government of Canada are or shall become parties. The Department of Transportation has executed this permit and affixed its seal on January 27, 1986 •
MATTHEW V. SCOCOZZA Assistant Secretary for Policy and International Affairs
(SEAL) FOR DFFICIAJ. USE ONL y
UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D. C.
Issued by the Department of Transportation on the 6th day of February, 1986
Application of NIPPON CARGO AIRLINES COMPANY, LTD. Docket 42023 for a foreign air carrier permit pursuant: to section 402 of the Federal Aviation Act of 1958, as amended
ORDER ISSUING FOREIGN AIR CARRIER PERMIT
On February 29, 1984, Nippon Cargo Airlines Company, Ltd. (NCA) filed with the Civil Aeronautics Board an application for an initial foreign air carrier permit 1/ to engage in scheduled all-cargo services commencing April 1,-1985, (1) between a point or points in Japan and the coterminal points San Francisco and New York, and (2) between a point or points in Japan and the terminal point New York, New York, via the intermediate point Anchorage, Alaska. '!:._! NCA further requested authority to perform cargo charters in accordance with 14 CFR Part 212. In support of its application, NCA stated that it has been licensed by its government to perform the all-cargo services at issue here, and, by Diplomatic Note dated November 16, 1983, was designated by the Government of Japan in accordance with Article 4(A)(l) of the United States-Japan Air Transport Services Agreement, as amended. 3;
lJ NCA 1s application was summarized in the Federal Register, 49 FR 9244, March 12, 1984. 2/ On April 9, 1984, NCA amended its application, defining its request for Anchorage intermediate authority as a technical stop. 3/ TIAS 2854, 4158, 5939, 6787, 7333 and 8882.
FOR omcw USE Dilly 2
ANSWERS During March, 1984, Federal Express Corporation, The Flying Tiger Line Inc., and Transamerica Airlines, Inc., filed answers in response to NCA 1 s permit application. The carriers urged deferral of NCA's application pending resolution of various aviation issues with Japan. Federal Express and Flying Tiger also expressed concerns about possible anticompetitive consequences of NCA 1 s ownership. Specifically, Federal Express argued that action on NCA's application should be deferred pending the concurrent g.rant of all-cargo authority to Federal Express or until an indication of willingness by the Government of Japan to grant such authority to Federal Express.
Flying Tiger listed (1) Japanese domination of the air freight market, and the likelihood that NCA's entry would increase Japan's market share, and, (2) the fact that NCA's application cannot be considered independent of Japan Air Lines' request for expanded cargo rights into and beyond the U.S. Transamerica stated that it had no objection to NCA's application provided the U.S. reached a satisfactory understanding with Japan regarding additional U.S. carrier designations under the bilateral agreement. Transamerica also noted that while NCA sought scheduled as well as charter authority, its Japanese license only provides for the operation of scheduled services. On May 14, 1984, NCA filed a reply to the answers of Federal Express, Flying Tiger and Transamerica.~/ On June 28, 1984, NCA filed a motion for expeditious treatment of its pending application and was answered by Flying Tiger. On July 18, 1984, NCA responded. 5/ RESULTS OF u.s.-JAPAN NEGOTIATIONS On May 1, 1985, the United States and Japan signed an interim agreement, embodied in a Memorandum of Understanding, which, among other things, provides for NCA to commence its all-cargo services and to continue them
4/ NCA's reply was accompanied by a motion for leave to file an otherwise unauthorized document. §_/ We will grant all 111Jtions to file otherwise unauthorized documents. 3 until the conclusion of comprehensive revision talks.§_/
On April 30, 1985, we orally granted NCA an exemption, ~ sponte, from section 402 of the Act to perform those services provided for in the MOU, until September 6, 1985, or the conclusion of the comprehensive revision talks, whichever was later. This authority was and is subject to our standard conditions applicable to exemption authority, and to NCA's adherence to the terms of the MOU. That exemption authority remains in effect, and NCA is currently conducting operations under that authority. DECISION We have decided to issue NCA a foreign air carrier permit authorizing it to perform all-cargo services between Tokyo, Japan, and San Francisco/New York. We have thoroughly reviewed the record and have decided to grant the application using the simplified Subpart Q procedures._?/ The public was informed of the carrier's application by notices in the Federal Register and the CAB's weekly list of applications filed, describing the authority sought and giving interested persons an opportunity to submit evidence and objections to the award of the authority. These notices provided the required notice and filing opportunities. Simplified procedures are appropriate in this case, because there are no material issues of fact which require other procedures. We are granting NCA the authority it seeks to the extent that it is encompassed by the April 30, 1985, MOU and subject to the conditions and limitations contained in that agreement.
6/ The MOU provides for NCA to operate six (6} wide-body roundtrip all-cargo flights per week on a route between Tokyo and San Francisco/New York as of May 1, 1985. The MOU provides that NCA may increase its frequencies from April 1, 1986, by a percentage equal to the percentage increase in the total air cargo traffic between Japan and the United States for the period January 1, 1985, to December 31, 1985, over the total air cargo traffic for the period January 1, 1984, to December 31, 1984, and similarly for each succeeding year. The MOU also provides that any increased frequencies that become available and are not used may be reserved for later use. The MOU also specified additional rights that would be available to U.S. carriers. Jj 14 CFR 302.1701 et~· Under Rule 29(b), we may, in our discretion, omit a tentative decision in proceedings under Subpart Q and proceed directly to a final decision. 4
In rea-ching our dec1sion, as more fully discussed below, we find that, based on the record, NCA is substantially owned and effectivell controlled by nationals of Japan, and that it is fit, willing and able to conduct the authorized services and adhere to the provisions of the Act, and our rules, regulations, and requirements. PUBLIC INTEREST CONSIDERATIONS The permit authority granted by this order is provided for in the May 1, 1985, Memorandum of Understanding between the United States and Japan. 8/ On August 13, 1983, NCA was issued a license by the Japanese Ministry of Transport (NCA Exhibit 402, Docket 42023) to perform scheduled "all freight service11 over the routing Tokyo-San Francisco-New York. In November 1983, NCA was designated by the Government of Japan under Article 4(A){l) of the United States-Japan Air Transport Services Agreement to serve Japanese routes 1 and 3 of the Route Schedule appended to the Agreement. We find that the view of the U.S. carrier respondents that we should defer action on NCA's request until resolution of pending U.S.-Japan aviation issues has been effectively dealt with by the signing of the May 1, 1985 interim agreement, which specifically provides for this authority to be granted to an airline of Japan.9/ We have also considered arguments concerning the possible anticompetitive consequences of NCA's ownership. Although we do not believe that this factor warrants withholding permit authority, we intend to monitor the situation. We also note that the Department of Justice has been fully apprised of the situation and has filed no objections to the issuance of the permit. NCA'S OWNERSHIP AND CONTROL NCA was formed on September 21, 1978, by four Japanese shipping companies 10/ and AlJ Nippon Airways, a domestic Japanese scheduled
8/ The authority granted is subject to the limitations of the MOU. Thus, NCA is limited to six flights per week and any request to operate extra sections would require additional authority. 9/ The MOU also provides for additional passenger and cargo rights for U.S. carriers. The Department has instituted a case to determine which U.S. carriers should exercise those rights. See Order 85-11-29, November 13, 1985, instituting the U.S.-Japan Gateways Case, Docket 43575. 10/ The Japanese shipping companies are Kawasaki Kisen Kaisha, Ltd. ("K" Line); Nippon Yusen Kaisha (NYK Line); Mitsui O.S.K. Lines; and Yamashita-Shinnihon Steamship Co., Ltd. (Y.S. Line). Japan Line, Ltd. (Japan Line) and Showa Line, Ltd. subsequently became stockholders. 5 carrier. Subsequent stock transactions diversified NCA's ownership. As of April 1, 1984, the company had 6,400,000 shares of stock issued and outstanding, 100% owned by Japanese citizens.1lf OPERATIONAL FITNESS We find that NCA is operationally fit to conduct the operations at issue here. Biographical data supplied by the applicant demonstrate that a11 of NCA's officers, directors and key management personnel have considerable transportation experience. NCA management personnel have been drawn from companies with extensive experience in shipping, air freight forwarding, rail and air carrier operations. NCA stated that it would inaugurate its proposed services with dry-leased All Nippon Airways' B-747-200 aircraft to be used exclusively by NCA. Maintenance of NGA's aircraft will be performed in accordance with ICAO standards by All Nippon Airways at Tokyo. Transit checks on the aircraft will be performed under contract supervised by NGA maintenance representatives. NCA stated that it had not been involved in any safety or tariff violations during the five years preceeding the filing of the permit application.12/
11/ NCA 1s stock is issued as follows: "K" line (10%), NYK line (10%), Mitsui O.S.K. Lines (10%), Y.S. Line (10%), All Nippon Airways (10%), Japan Line (5%), Showa Line (5%), 23 Japanese Banks (15.47%), 16 Japanese insurance companies (11.09%), and 34 other Japanese citizen companies (13.44%). See Exhibit NGA-103, Docket 42023. 1£1 By letter dated March 13, 1984, the CAB requested that the FAA provide a safety and compliance evaluation of NCA. By letter dated March 22, 1984, the FAA's Office of Flight Operations stated that although NCA held no operating authority, it knew of no reason why the CAB should act unfavorably on NGA's pending permit application, so long as it made any authority granted to NGA subject to the customary conditions. A copy of the CAB's letter and the FAA's response have been placed in Docket 42023. On July 18, 1985, the FAA advised the Department that on May 1, 1985, NCA had been issued FAR Part 129 Operations Specifications and it knew of no reason why we should act unfavorably on NCA's application. 6 FINANCIAL FITNESS We find that NCA is fit to conduct the operations we are authorizing without exposing the public to undue financial risk. The applicant stated that because its proposed operations were not to commence until 1985 it was unable to provide historical financial statements based on operations. NCA did, however, provide forecast balance sheets for April 1, 1984 and 1985, which are summarized in Appendix A to this order. In addition, NCA provided current balance sheets and profit and loss statements for the seven original NCA stockholders.13/ NCA further stated that it does not receive, or expect to receive, financial assistance from the Government of Japan. The applicant stated that it had been able to meet its financial obligations, had never defaulted on transportation commitments, and had never been refused debt financing.14/ In view of the foregoing and all of the facts of record, we find and conclude that: 1. Nippon Cargo Airlines Company, Ltd. is qualified and has been designated by its government to perform the air services described in the attached permit; 2. Nippon Cargo Airlines Company, Ltd. is fit, willing and able properly to perform the foreign air transportation described in the attached permit and to conform to the provisions of the Act, and to our rules, regulations, and requirements; 3. The public interest requires that the exercise of the privileges granted by the permit should be subject to the terms, conditions, and limitations contained in the attached permit, and to such other reasonable terms, conditions, and limitations required by the public interest as we may prescribe; 4. Nippon Cargo Airlines Company, Ltd. is substantially owned and effectively controlled by nationals of Japan; 5. The issuance of this foreign air carrier permit will not constitute a "major regulatory action 11 under the Energy Policy and Conservation Act of 1975, as defined in section 313.4(a){l) of our Regulations;l5/ 6. The public interest does not require an oral evidentiary hearing on the application; and 7. Except to the extent granted, the application of Nippon Cargo Airlines Company, Ltd. in Docket 42023 should be denied.
13/ See Exhibit NCA-300, pages 1-27, Docket 42023. I4! On May 6, 1985, NCA filed the requisite Certificate of Insurance which satisfies the requirements of 14 CFR Part 205. 15/ This finding is based on the fact that the grant of this permit will not result in a near-term increase in fuel consumption in excess of 10 mi 11 ion gallons. 7 ACCORDINGLY, 1. We issue Nippon Cargo Airlines Company, Ltd. a foreign air carrier permit, in the form attached, authorizing it to perform all-cargo services between the terminal point Tokyo, Japan, and the coterminal points San Francisco, California, and New York, New York; 2. Nippon Cargo Airlines Company, Ltd. may operate a maxifl'l.lm of six wide-body roundtrip all-cargo flights per week as of May 1, 1985, and shall be permitted, by subsequent Department order, to increase its frequencies beginning April 1, 1986, by a percentage equal to the percentage increase in the total air cargo traffic between Japan and the United States for the period January 1, 1985, to December 31, 1985, over the total air cargo traffic for the period January 1, 1984, to December 31, 1984, under procedures set forth in the April 30, 1985 MOU, and similarly for each succeeding year (available increased frequencies not used may be reserved for later use); 3. Flights exceeding the number described above are not authorized; 4. The exercise of the privileges granted above are subject to Nippon Cargo Airlines' compliance with the conditions listed in the permit and the Attachment to the permit, and the terms of the April 30, 1985 MOU; and 5. We will grant all motions in Docket 42023 to file otherwise unauthorized documents. 6. Unless disapproved by the President of the United States under section 801(a) of the Act, this order and the permit attached shall become effective on the 6lst day after its submission to the President,16/ or upon the date of receipt of advice from the President that he does not intend to disapprove the Department's order under that section, whichever is earlier; and 7. We will serve a copy of this order on all persons that have filed pleadings in Docket 42023, the Ambassador of Japan in the United States, the Secretary of State and the Federal Aviation Administration (San Francisco-FSDO #3 and AFS-220). By:
MATTHEW V. SCOCOZZA Assistant Secretary for Policy and International Affairs • (SEAL)
16/ This order was submitted to the President on February 6, 1986.
The 6lst day is April 10 1 1986. APPENDIX A SUMMARY OF APPLICATION NIPPON CAR.GO AIRLINES Docket 42023 Homeland Country: Japan Authority Covered By Bilateral Agreement: Yes--United States-Japan Air Transport Services Agreement, as amended, and the April 30, 1985, Memorandum of Understanding. Designated By Its Government: Yes--Exhibit 401, Docket 42023 Holds Government license For Authority Sought: Exhibit 402 - Docket 42023 Operating History: None--new applicant Aircraft Owned (O) And leased (L): 2 B-747-200F dry-leased from All Nippon Airways - Aircraft will be used exclusively by NCA. Aircraft Maintenance Performed By: All Nippon Airways in accordance with ICAO standards. Financial Indicators (Last 2 years): April l, 1985 April 1, 1984 forecast forecast mil 1ions millions Total Assets $ 16.0 $ 10.0 Total Liabilities $ 7.0 Owners' Equity $ 16.0 $ 3.0 Operating Profit (loss) (No historical financial data based on operations) Majority Ownership By Nationals Of: Japan Effective Control By Nationals Of: Japan Insurance Coverage: Yes--rneets minimum requirements of 14 CFR 205 Insurance Refused Or Involuntarily Canceled During last 3 Years: No Refused Debt Financing last 3 Years: No Defaulted On Transportation Commitments Last 3 Years: No historical data available Failed To Meet Current Financial Obligations Last 3 Years: No historical data available Safety Violations During Last 5 Years: No historical data available Tariff Violations During Last 5 Years: No historical data available Subscribes To Standard Permit Conditions Regarding Insurance, to Annex 6 Of the Chicago Convention, and to C.A.B. Agreement 18900: Yes UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.
PERMIT TO FOREIGN AIR CARRIER
NIPPON CARGO AIRLINES COMPANY, LTD. is authorized, subject to the provisions set forth, the prov1s1ons of the Federal Aviation Act of 1958, as amended, and the orders, rules, and regulations of the Department of Transportation, to engage in scheduled foreign air transportation with respect to property, as follows: Between the terminal point Tokyo, Japan, and the coterminal points San Francisco, California, and New York, New York. This permit and the exercise of the privileges granted in it shall be subject to the terms, conditions and limitations attached, and to those contained in Order This permit shall be subject to all applicable provisions of any treaty, convention, or agreement affecting international air transportation now in effect, or that may become effective during the period this permit remains in effect to which the United States and Japan shall be parties. This permit shall be effective on • Unless otherwise terminated at an earlier date pursuant to the terms of any applicable treaty, convention, or agreement, this permit shall terminate (1) upon the dissolution or liquidation of the holder to which issued; or (2) upon the effective date of any treaty, convention, agreement or amendment, which shall have the effect of eliminating the route or routes authorized by this permit from the routes which may be operated by airlines designated by the Government of Japan (or in the event of the elimination of any part of the authorized route or routes, the authority granted shall terminate to the extent of such elimination), or (3) upon the effective date of any permit granted by the Department to any other carrier designated by the Government of Japan in lieu of the holder, or (4) upon the termination or expiration of either the Air Transport Services Agreement between the Government of the United States of America and the Government of Japan effective September 15, 1953, as amended, or of the Memorandum of Understanding ratified May 1, 1985: However, clause (4) of this paragraph shall not apply if, prior to occurrence of the event specified in clause (4), the operation of the foreign air transportation authorized becomes the subject of any treaty, convention, or agreement to which the United States and Japan are or shall become parties. The Department of Transportation has executed this permit and affixed its seal February 6, 1986.
MATTHEW V. SCOCOZZA Assistant Secretary for Policy and International Affairs {SEAL) ATTACHMENT PERMIT TO FOREIGN AIR CARRIER Docket 42023
The holder's authority to conduct operations under the permit to which this is attached shall also be subject to the following terms, conditions, and limitations: (1) The privileges granted by this permit are subject to the condition that the foreign air carrier CO!ll>lies with the requirements of 14 CFR 203, concerning waiver of Warsaw Convention liability limits and defenses; (2) The privileges granted by this permit are subject to the condition that the foreign air carrier complies with the requirements for minimum insurance coverage contained in 14 CFR 205; (3) By accepting this permit, the holder waives any right it may possess to assert any defense of sovereign immunity from suit in any action or proceeding instituted against the holder in any court or other tribunal in the United States (or its territories or possessions) based upon any claim arising out of operations by the holder under this permit; (4) The holder shall not operate any aircraft under the authority granted by this permit, unless the holder complies with operational safety requirements at least equivalent to Annex 6 of the Chifago Convention; (5} The holder shall conform to the airworthiness and airman coq>etency requirements prescribed by its home Government for international air service; (6) Except as specifically authorized by the Department of Transportation, all flights to/from the United States must originate or tenninate in the holder's homeland; (7) The holder shall not provide the foreign air transportation authorized by this pennit unless it holds a currently effective authorization from its Government for such operations and such document is on file with the Department of Transportation; (8) The exercise of the privileges granted by this permit shall be subject to such other reasonable terms, conditions, and limitations required by the public interest as may be prescribed by the Department of Transportation; and shall be subject to compliance with all applicable orders and regulations of other U.S. agencies and courts, and with all applicable laws of the United States; and (9) This permit cannot be sold or otherwise transferred without explicit Department approval under section 402(g) of the Federal Aviation Act of 1958, as amended.
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